FBR Analysts Met With New York Times Management; Here's What Happened

In a report published Monday, FBR Capital Markets analyst William Bird maintained a Market Perform rating on New York Times Co NYT and a price target of $13.50, following a meeting with the management.

Analyst William Bird said that the meeting did not reveal anything "thesis-changing" and that the stock appears fairly valued at the current price. "Based on our page counts, quarter-to-date print ad pages, which are prone to volatility," have declined 8 percent in the current quarter, as compared to a 5 percent decline in 1Q.

New York Times Co has guidance to a mid-single-digit decline in total ad revenues, including print and digital, consistent with 1Q.

In the report FBR Capital Markets noted the key points of the meeting as:

• Instant Articles, launched by Facebook Inc FB, may enable New York Times Co to broaden its reach, expose its product to younger readers, reduce article-viewing friction and earn some additional ad revenues. "NYT appears to be proceeding down this path cautiously, carefully studying the impact on its core product. Longer term, it remains to be seen how the commercial terms may evolve."
• NYT has an option, exercisable in 2019, to repurchase the condo interest relating to 21 floors of its building for $250 million. The market value of the 28 floors is estimated at about $1 billion. However, whether or not to relocate may be a complicated decision, since remaining in a central location may be important to the company.
• "International appears to offer the biggest opportunity to increment NYT’s paying digital subs, currently at 957,000. If international usage (27.5% of monthly unique visitors) and monetization (>10% of paying digital subscribers) reach equilibrium, then subs could rise another 263,000, suggestive of headroom for growth."
• The key priorities for the company remain Mobile, which contributes more than 10 percent of NYT's digital ad revenues and more than 50 percent of usage, Video, which contributes less than 10 percent digital ads, and Native, which accounts for less than 10 percent digital ads.